Startup lobby losing sheen, say experts

Flipkart and Ola are said to be in talks with global giants for investments.

NEW DELHI: Lobby group Indiatech, backed by some of India’s leading startup champions, including Sachin Bansal of Flipkart and Bhavish Aggarwal of Ola, finds itself at a crossroads with the logic behind its establishment under question.

Besides that, a former IAS officer hired to spearhead the initiative quit last week after differences with the founders four months into the job, according to people with knowledge of the matter.

Indiatech was established late last year in the wake of calls by Bansal and Aggarwal for policies to protect homegrown tech companies in 2016. They urged the government to formulate policies toward this end so that their companies could compete against deep-pocketed global rivals such as Amazon and Uber. Aggarwal had even accused overseas companies of using India as a “capital-dumping ground.”

But as experts point out, Flipkart and Ola are said to be in talks with global giants for investments. ETreported that Flipkart is in advanced negotiations with Walmart Inc. over selling what could potentially be a controlling stake in the ecommerce marketplace to the US retail giant. Ola is said to be in talks with Uber for a merger.

“They sort of have an identity crisis,” said an executive familiar with developments at Indiatech.

“If Walmart buys Flipkart, then it could get disbanded completely,” he said, asking not to be named. He also said that Ola been distancing itself from Indiatech of late.

Bansal of Flipkart did not respond to queries. Ola declined to comment.

“Indiatech as an organisation has always been in a conceptual stage, and there has never been a formal launch,” an executive at one of the founding companies said on condition of anonymity.

Another senior executive at one of the companies active in Indiatech said there was “nothing much happening” at the lobby group. “We were not clear in our heads, whether it was right thing or wrong thing to do to shut out foreign competition--that is why we stayed away,” said the founder of a homegrown tech firm that decided not to be part of the group.

“At one level, it is a consumer advocacy market and at another level you want to do things for Indian companies to flourish. We were unclear because of these two conflicts. Therefore, we did not participate in it.”

Rajat Tandon, president, Indian Private Equity and Venture Capital Association, said: “I don’t know where protectionism will lead to… It’s about access to capital, and one should make use of it, especially when everybody is running to the same pool of capital.”

Others said Indiatech could have a legitimate agenda.

“The real ask is an institutionalised system of giving regulatory forgiveness on the same terms as that given to the multinationals,” said Sharad Sharma, cofounder of iSpirt Foundation, an advocacy group for technology-focused companies. “There has be to alignment amongst all these players on this ask. Maybe this isn't the case yet.”

One of the persons cited above said a legitimate case could be made to ensure that Indian startups survive and thrive.

“The people raising the issues may be doing so for their own reasons, which in some cases may be expedient,” said the head of the Indian company that stayed away from the group cited above. “However, the larger issue of having Indian companies that are large and sustainable in the internet sector remains.”

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